(China Alert) SDR inclusion: Real and exploitable implications

·IMF SDR inclusion cements the RMB as a fixture in global markets
·First-movers will be best-positioned to capture structural change
·China’s reform agenda is becoming increasing irreversible

Update: The IMF yesterday announced the RMB’s inclusion into the Special Drawing Rights (SDR) basket with a weighting of 10.9%. This move is of little surprise, understated magnitude and long-term consequence. A lot of noise has marked the decision but little insight has been offered on its immediate implications, or how to capitalize on the opportunity. Central banks restructuring their reserves is just the beginning, in Z-Ben Advisors’ view. We would argue that growth of RMB exposure among asset owners and asset managers alike is now much more likely to come in the form of RMB-denominated fixed income, offered in both foreign and local markets, issued by both local and foreign debtors. Here, we present our view of the opportunities SDR inclusion offers to product manufacturers both now and over the coming five years.

SDR inclusion should persuade all but the most apocalyptically bearish observers that the RMB is now……

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